The Obvious Series: Layer 2s

There are two parts to The Obvious Series:

  1. Simple explanations for newer entrants

  2. Abstract wtf are we doing here reflections

Layer 2 (L2)

A more affordable, faster, and interest-specific layer built on top of Ethereum Mainnet.

The Simple

Until quite recently, all pertinent activity was handled on Ethereum Mainnet (Layer 1). People from past bull markets can tell you of unbelievable gas prices ( the cost of submitting a transaction). It wasn’t uncommon to pay thousands of dollars when trying to make urgent moves in the mania.

Think of Layer 1 as a crowded doorway to all things onchain.

Layer 2s looks to remedy this. They provide:

  • cheaper transaction fees (orders of magnitude cheaper)

  • the security of existing on top of Mainnet

  • network effects of supplying the previous two

Look at Arbitrum, Optimism, Base, & Zora Network to get familiar with some of the current initiatives and their various interests. Instead of everyone in the same room, things are starting to get a bit more organized.

Arbitrum is heavily focused on gaming and decentralized finance. Optimism is heavily focused on this thing they call the superchain. Base is focused on builders. Zora is focused on creativity.

They all allow you to bridge your Ξ back and forth on Mainnet, while simultaneously creating spaces we need for global consumer adoption.

The Abstract

I wrote an essay digging into the reasons why.

With some recent developments and my own experimentation on L2s I come away with a few points:

  1. the margins on transaction fees are exponentially more significant on the margins of user activity

  2. the ux and brand cohesion is the difference between walking down a sketchy alley or into a penthouse lobby

  3. cultural data supersedes the cultural adoption of L2s

  4. the bridge is the bridge

From a creator and hobbyist collector perspective, it is undeniable that cultural allure has infiltrated chain profiles. Tezos has an art ecosystem but what of it’s infrastructure? Optimism and Arbitrum have NFT marketplaces but what of their trading volume?

The reality of our situation, in so far as I can see, is that we have a bystander effect in play. We know L2s matter. We know that L1 fees are untenable at scale. But we also know the buccaneer is the one who reaps the most reward. Someone has to be the pioneer though.

Look at Jack Butcher’s recent open edition on Zora Network. Everyone here knows how to bridge to L2, mint NFTs, etc. But they were waiting for strong enough signal.

This is the current obstacle we face in L2s. I see a few routes to overcoming it:

  • High signal players begin assertively adopting L2 functions (fastest route)

  • New signal players begin imprinting cultural data on L2s as they develop their profile in the industry’s consciousness (slower route)

Either way, we will overcome this obstacle. It’s just a matter of when.

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